2024 (3) TMI 237 - AT - Service Tax

Recovery of service tax - activity of transportation of goods by road and in providing Business Support Service to various clients like, Vehicle Factory Jabalpur, Railway, Bharat Earth Movers Limited, Bharat Electronics Limited and Gun Carriage Factory Jabalpur - scope of definition of Business Entities and persons as defined under Section 65 (B) (17) and 65 (B) (37) respectively of the Finance Act - HELD THAT - The appellant was taking trucks of individual owners, admittedly the appellant itself is not a goods transport agency and no consignment note was issued by the appellant. Facts on record also clarifies that the appellant is not engaged in door to door transportation, hence, is not a courier agency. Resultantly, it becomes clear that the service rendered by the appellant is simply the service by way of transportation of goods which is covered under Sub-clause B of Section 66D of Finance Act. Thus, the appellant is wrongly held liable for payment of service tax on the said activity. Coming to the tax liability with respect to legal consultancy services under reverse charge mechanism, it is observed that it is an admitted fact that the amount booked under the head legal expenses was not paid to any advocate and affidavit to this effect has also been submitted by the appellant. The adjudicating authority neither has considered the said affidavit nor has appreciated any other evidence on record which may show that the legal expenses were paid to the lawyer. The onus was definitely on Revenue to show that the appellant had received services of Advocate so as to make them liable to pay service tax under reverse charge. In absence thereof, the confirmation on this count is also not sustainable. Once the appellant is held to have no service tax liability, the question of having any intent to evade the same does not at all arise. Resultantly, even penalty has also wrongly imposed on the appellant. The appeal is allowed.

Summary

Issues involved:
The issues involved in the judgment are the liability of service tax on transportation services provided by a partnership concern, the applicability of Mega Exemption Notification, and the tax liability regarding legal consultancy services under reverse charge mechanism.

Liability of Service Tax on Transportation Services:
The appellant, engaged in transportation of goods by road and providing Business Support Service to various clients, was enquired by the Department regarding service tax evasion. The Department alleged that the appellant was providing support service to the business of a Vehicle Factory by shifting vehicles to designated ordinance depots. A show cause notice was issued proposing the recovery of service tax amounting to Rs. 37,11,8851. The Department contended that the appellant's services did not fall under the negative list and held them liable to pay service tax. However, the Tribunal observed that the appellant's activities constituted transportation of goods, which falls under the negative list of services as specified in Section 66D of the Finance Act. Therefore, the Tribunal set aside the order imposing service tax liability on the appellant.

Applicability of Mega Exemption Notification:
The appellant argued that they were transporting defence and railway equipment based on work orders awarded through tenders and cited the Mega Exemption Notification stating that transportation of defence or military equipment by rail or vessel is not liable to service tax. The Tribunal noted that the appellant was acknowledged as the only vendor for transporting vehicles to ordinance depots and observed that the Adjudicating Authority failed to consider the Mega Exemption Notification. Consequently, the Tribunal held that the order imposing service tax liability based on the lack of work orders was not sustainable and allowed the appeal.

Tax Liability Regarding Legal Consultancy Services:
Regarding legal consultancy services under the reverse charge mechanism, it was found that the amount booked under legal expenses was not paid to any advocate. The appellant submitted an affidavit confirming this fact. The Tribunal observed that the adjudicating authority did not consider the affidavit or any evidence showing payment to a lawyer. As the Revenue failed to demonstrate that legal services were received, the confirmation of tax liability on this count was deemed unsustainable. Consequently, the Tribunal held that the penalty imposed on the appellant was also unwarranted and set aside the order.